JBG Smith Abandons the Crossroads

Last month JBG Smith sold its approximately ten-acre commercial property located in the heart of the Takoma-Langley Crossroads. The unexpected sale to a private equity firm casts the future of the Crossroads in a dramatically different light. It forces us to question the direction of Takoma Park’s planning and economic development goals. 

JBG Smith’s abandonment of the Crossroads should make decision makers in the City, Montgomery County and Prince George’s County sit back and take a hard, fresh look at the relevance of the Takoma-Langley Crossroads Sector Plan that maps the Crossroads’ future.

The Sector Plan, adopted by the County in 2012, was a joint city/county/county effort. It employed “transit-oriented development” (TOD) principles intended to attract developers to build higher density residential projects mixed with retail and small office. TOD favors pedestrian movement, plazas and green spaces and discourages reliance on cars and parking lots.

Purple Line and bus center

The plan was conceived in the expectation of a future Purple Line light rail stop, and the fact that with 12 bus lines converging in the Crossroads, it is the highest trafficked multi-modal intersection in the state of Maryland and DC not associated with the Metro System. The unique situation forced Maryland DOT to construct a $35 million Crossroads Transit Center that opened in 2016 to corral all the bus transfers and keep riders safe.

When JBG Smith acquired the tract in 2015, it seemed to signal that the Sector Plan now had an investor willing and able to kick the redevelopment phase into gear. The company, generally regarded as the largest property developer in the region, however, never indicated its intentions for the property. But its people let it be known that they were all about building “place-making” projects, a concept fully compatible with the Sector PlanThe JBGs of the world don’t willy-nilly acquire real estate just for the sake of collecting rents. 

A moral dilemma

Langley Park is a significant part of a two-mile stretch along University Boulevard and Piney Branch Road is popularly known as the “International Corridor.” A big part of it is Langley Park, on the Prince George’s side of the Crossroads, is a densely populated home to 20,000 people, largely Hispanic, and mostly from Central America.

In 2009, at the outset of the sector planning process, planners faced a moral dilemma. if the Sector Plan were to become reality, it could well mean that much of the long established immigrant community that lives and works there and depends on the shops, grocers, and services would be displaced by new development.

Indeed, virtually no one in the Langley Park section of the Crossroads supported the Sector Plan. Even the property owners were hardly excited about it. Led by Casa of Maryland, residents and small business owners expressed dismay with the prospect of higher rents, the possible destruction of a lot of old, but affordable rental housing in favor of more expensive units, and displacement of many of the ethnically owned businesses. From their viewpoint, the Sector Plan posed an existential threat to their cultural enclave.

The property

The transacted property occupies the southeast corner of the Crossroads and ranges from the Walgreens to the US post office. It is purely commercial, with a lot empty space in the middle, composed of 12 parcels, about 120,000 square feet of floor area, and assessed at $41 million. Most of the structures date from the 1950s and constitute one of the oldest strip centers remaining in Maryland. 

The intersection of New Hampshire Avenue and University Boulevard

The company that paid nearly $58 million for the JBG Smith holdings calls itself Granite Canyon Partners. Located in the DC area, according to it website (GraniteCityPartners.com), GCP is a relatively new entity that has recently purchased a variety of commercial properties scattered across the Baltimore and DC regions. The principals are seeking equity investors and tenants. Buying and then leasing or flipping non-residential properties is a routine way to invest in commercial real estate, but it typically has nothing to do with redevelopment. 

Lacking any discernible evidence that any of the ten or so major commercial property holders in the Crossroads have any interest in redeveloping their sites, JBG’s singular action makes it doubtful that any of the Sector Plan will be realized in the foreseeable future, if ever. It calls into question the Sector Plan’s underlying proposition that the Crossroads is ripe for redevelopment. Evidently, that is simply not the case.

So what’s happening?

The overall context is the Crossroads’ hugely prosperous economy. There are three good reasons for what is and is not happening.

First, the JBG Smith property is a “cash cow,” meaning that it spins off a huge surplus cash flow due largely to strong market rents and durable tenancies with waiting lists. The owners have told us this. Likewise, this is the likely case for most of the retail properties in the Crossroads. If you’re the property owner, that makes it daunting to justify demolishing and rebuilding from scratch, a process that would take a minimum of three years, if not more. 

Second, the Purple Line’s expected economic impact on the Crossroads has always been overrated from the standpoint of redevelopment. (Overall, the Purple Line is of course extraordinarily important for racial equity reasons, including access to jobs and education.) While the Crossroads is already a bustling, dynamic commercial district with little space for change, in contrast, the Purple Line will likely spur extensive redevelopment at the Long Branch stop.

Third, is something few in Takoma Park seem to understand. Within a 3-mile radius of the Crossroads there is virtually an unlimited supply of land that will be far easier to acquire and develop than in Takoma Park. And, probably more lucrative to develop with far less social displacement. Developers are rarely interested in knocking down hundreds of dwelling units and popular shopping districts to build new developments. Proof of this surrounds Takoma Park. Look at the Prince George’s Mall area (know relabeled Hyattsville Crossing), College Park, Hyattsville, Wheaton, and of course on our city’s very own doorstep, the Takoma Metro station in DC. Developers, alas, go where the investment opportunities appear easier, more predictable, feasible and are welcomed. 

This is not a slam against the City of Takoma Park where preservation is valued and change is met with caution. The Sector Plan doesn’t need to be revoked. It can stay in place. But the City of Takoma Park, Montgomery County and Prince George’s County together need to recognize that, come what may, the multi-ethnic, multi-lingual Crossroads and the associated International Corridor are here to stay.

Where does this lead? 

The moral dilemma cast by the threat of major redevelopment and dislocation goes away. That’s really important. Small business owners and residents in the Crossroads will gain more assurance that the coming of the Purple Line will actually accrue to their personal benefit.

It does not, however, mean there will be no redevelopment at some point. Residential landlords could elect to replace aging housing when the stark tax advantages and cheaper operating costs of building new housing become paramount.

Takoma Park’s task

The City can and should put its energy and ingenuity into promoting the Crossroads and celebrating the International Corridor, especially in cooperation with Prince George’s County. The robustness of the Crossroads’ economy redounds to the benefit of the first- and second-generation migrants who’ve come to the Crossroads and are still coming by the busload to DC at the present time.

We need to celebrate the Crossroads as one of the largest and most successful settlements of ethnic diversity in the United States. A wonderful model of how this can be done is the Eden Center, an old strip mall of over 125 stores in Falls Church, VA that describes itself as “Washington DC’s premier location for Vietnamese cuisine and specialties.” It has a fabulous web site at https://edencenter.com/

Past promotional efforts have been stymied by the county boundary that bisects the Crossroads. But this can be easily overcome with leadership. 

Takoma-Langley Crossroads Foundation

A big first step in that direction is the formation this year of the Takoma Langley Crossroads Foundation (I am a director). Kayleigh De La Puente, executive director of the Takoma-Langley Crossroads Development Authority has organized it. The foundation hopes to lead a conjoint effort to advance the interests of the small business community on both sides of the county line. Unlike the Authority, the foundation won’t be proscribed by political boundaries.

Let’s ensure that newly elected officials from the Governor’s office to the state assembly representatives to county council members in both counties and in Takoma Park will take the bit in their mouths and run with it. There’s a lot to be excited about.